Why Meta Stock Is Falling: AI Delays and Tariff Fears

Meta Platforms has taken a hit and not a small one. On May 23, 2025, its stock dropped 1.49%, closing at $627.06. Just a few weeks ago, Meta was nearing its 52-week high of $740.91. So, what’s causing the shake-up? Let’s break it down in plain language. This isn’t just about numbers. It’s about timing, global politics, missed deadlines, rising costs, and a whole lot of investor nerves.

Global Tensions Spark Market-Wide Jitters

The first blow didn’t come from inside Meta, it came from Washington. President Donald Trump shocked markets with a sudden announcement: a 50% tariff on European Union imports. While most investors aren’t convinced it’ll actually go into effect by the proposed July 9, 2025 date, the uncertainty alone was enough to rattle nerves across Wall Street. The S&P 500, a major benchmark, saw its fourth straight day of losses, and that pressure spilled over to tech giants like Meta.

Global investors don’t like surprises, especially when they involve trade wars between massive economies. Even if the tariffs are delayed or watered down, the idea of renewed economic tensions between the U.S. and EU was enough to send traders running for safety.

Meta’s AI Ambitions Stumble

But Meta’s problems aren’t just coming from the outside. There’s some serious turbulence brewing inside the company too. Meta had been teasing its next-gen AI model, “Behemoth”, with big promises. It was supposed to launch in April 2025, but that window has come and gone. The project has now been delayed to fall or even later, and the reasons aren’t small. According to internal sources and analyst Dmytro Kharkov, the delay is tied to engineering challenges and concerns over performance quality.

Some engineers reportedly believe the model isn’t ready for public release yet, while others are pushing to stay competitive against rivals like OpenAI and DeepSeek, both of whom have been moving fast. This delay doesn’t just damage Meta’s reputation in the AI world, it may allow others to grab a bigger slice of the market pie.

Capital Spending Skyrockets

Meta’s also spending a lot more money than expected. In its Q1 2025 earnings call, the company updated its capital expenditure forecast for the year, now expecting to spend between $64 billion and $72 billion up from its previous range of $60B to $65B. Most of this budget is being poured into AI infrastructure, including new data centers, custom chips, and computing hardware.

While this signals that Meta is serious about dominating the AI space in the long run, investors are worried about short-term profitability. More spending means slimmer margins and with stock markets already on edge, that’s a red flag for cautious traders.

Analyst Insight

Analyst Dmytro Kharkov summed it up neatly:

“The correction may last for the next few trading days. However, the overall positive market sentiment should allow the bullish trend to recover by the end of this week.”

That’s optimistic but realistic. The dip may not last long if Meta manages to get Behemoth back on track and ease fears about overspending.

Meta Stock Closing Prices May 2025

From High to Hesitant: A Quick Stock History

Earlier this year, Meta was riding high. Its stock touched $740.91, and it posted strong Q1 earnings. Analysts were bullish, praising its steady user growth and advertising revenue. But now, with AI delays and geopolitical noise, sentiment is shifting. Even though Meta’s market cap still sits around $1.576 Trillion USD, and its P/E ratio of 4.12% is respectable, investors are no longer giving it a free pass.

Our View: Innovation vs. Expectation

Here’s the thing Meta is doing what tech giants are supposed to do. It’s spending big on the future. It’s taking AI seriously. It’s preparing for the long haul. But the market isn’t patient. In a world that expects instant wins, even the slightest delay can cause panic. We think this dip is a reality check, not a red flag. Meta is facing heat, but it’s not burning. If it can launch Behemoth smoothly later this year, and if the EU tariff drama cools off, the stock may rebound stronger than ever.

What’s Next?

• Watch how the U.S.–EU tariff talks evolve
• Monitor progress updates on “Behemoth”
• Look at Meta’s next earnings call for capital expenditure strategy
• Keep an eye on AI competition Meta can’t afford to fall behind again